Former Reserve Bank of India Governor, Bimal Jalan, has questioned the timing of the demonetisation announcement by Prime Minister Narendra Modi.
Jalan, who held the RBI Governor’s post (1997-2003) during the first NDA government said that there must be a very good reason, war or security threat, to demonetise a legal tender.
It was during his time as the RBI Governor that India successfully negotiated the Asian crisis.
In an interview to The Indian Express, he said, “When you demonetise a legal tender, there must be a very good reason to do it. War, security threat. What demonetisation does is to give, as it were, a message to people that this government will not tolerate black money. The second part, which is equally relevant is, why now.”
Jalan also expressed his surprise over the central government’s decision to be secretive about the whole decision
He said, “There is no reason to my mind to be secretive, unless there is an emergency. I want to do it in three weeks, or two weeks or one week. as in a surgical strike. But this is not the same thing. On that, there can’t be two views. I am talking as a citizen here.”
The former RBI governor said that 90-95 percent of the people did not hold black money.
“We are from the organised sector and we have jobs. This is where we need to strike a balance, doing something with a notice and doing it in a way where the majority of the people are not hurt. You see the end is fine, you have to carefully choose the means to achieve this end,” he said.
PM Modi had announce the note ban on 8 November making old notes of Rs 500 and Rs 1,000 illegal. His decision was widely criticised and resulted in the deaths of over 80 people, who died due to demonetisation related stress.
While most of the perceived black money is back in the system, banks across the country still don’t have enough cash to dispense causing unprecedented cash shortages.
Modi, while making the announcement had boasted how he had kept the entire plan secret with not event relevant stakeholders being informed about it. The prime minister had cited the need to curb black money as the driving force behind his demonetisation decision.
The black money narrative, however, has now changed to creating a cashless economy in India.